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Because of our proximity to the eastern seaboard the majority of the tonnage produced by our membership is shipped by rail to the eastern seaboard to utility customers, and it is our opinion that if a coal pipeline is constructed under the authority of the proposed amendment, the same would be of no benefit whatsoever to central Pennsylvania, and on the contrary it would materially aid in the displacement of central Pennsylvania bituminous coal production by bituminous coal production from other areas.

Not only would central Pennsylvania's production be displaced with the consequent loss of jobs to citizens of our area, which area is already a distressed area and which area relies substantially on the coal industry for its economic lifeblood, but also we consider that the adoption of such an amendment and the implementation of a coal pipeline would have a serious and drastic effect upon the rail carriers who service our industry. This effect would be cumulative and would result in further layoffs of rail employees.

The proposed amendment to the Interstate Commerce Act appears to us to be an attempt by one or more large bituminous coal producers to take from central Pennsylvania a market which has traditionally belonged to it, and further, that the adoption of such an amendment and the construction of a coal pipeline under the authority thereof will tend to enable one or more large producing companies to monopolize the eastern markets and to effectively eliminate competition from our area.

We respectfully propose to your committee that after due consideration of the critical effect upon the central Pennsylvania bituminous fields with the cumulative loss of employment and income for citizens of central Pennsylvania, they refuse to recommend passage of the proposed amendment.

CHAPMAN & FRIEDMAN,

Washington, D.O., May 18, 1962. Hon. WARREN G. MAGNUSON, Chairman, Senate Commerce Committee, old Senate Office Buliding, Washington, D.C.

DEAR MR. CHAIRMAN : I should like to call to your attention certain aspects of the testiinony presented before your committee recently in the course of the hearings on s. 3044, a bill to amend the Interstate Commerce Act to grant any carrier of coal by pipeline, subject to any of the provisions of part 1 of the act, the right of eminent domain, and for other purposes. Certain of the representations made and the tactics employed by the railroad interests in the course of these hearings make it clear that there is a concerted attempt to frustrate competition with the railroads in a manner which is clearly violative of the antitrust policies of the United States.

In the light of such tactics I feel that it is imperative to call certain aspects of the testimony and other related matters to your attention in order that the record before your committee not be misleading otherwise conducive to action contrary to sound public policy. For this reason I respectfully request that this letter, which sets forth the facts as they actually are, be incorporated in the record of your committee relating to S. 3044.

The hearings before the Senate Committee on Commerce concerning S. 3044 establish that the passage of the bill is required in order to assure free competition and to prevent the perpetuation of the virtual monopoly now enjoyed by the railroads in the long distance inland transportation of coal.

Federal right of eminent domain for coal pipelines is required only because the railroads have combined and agreed to refuse to permit any coal pipeline to cross under their tracks. That this combination of the railroads was formed for the sole purpose of restraining and preventing competition is evidenced by the fact that in recent years the railroads have granted crossing permits as a matter of course to natural gas and petroleum pipelines, but refuse to grant the same privilege to coal pipelines. Indeed, crossing permits for natural gas pipelines have been limited by the express proviso that the crossing privilege is not to include the conveying of coal through the pipeline. Obviously the railroads' announced refusal to permit a pipeline crossing based solely upon the commodity carried within the pipeline constitutes a prima facie restraint of competition in the transportation of the commodity thus discriminated against.

We do not believe that the Congress should permit the railroads to thus misuse the many millions of acres of free land grants which they received from the States and the Federal Government. Indeed, the network of the railroads in

this country is such that no form of transportation which requires a permit to cross over or under railroad trackage can compete in the face of a combination formed by the railroads for the purpose of preventing the acquisition of the required crossing permits. The railroads' misuse of their rights-of-way to prevent competition has become so prevalent that it became necessary for the last legislature of the State of West Virginia to enact senate bill No. 29, granting coal-fired steam electric powerplants the right of eminent domain in order to permit them to construct private roads across railroad tracks in order to transport coal from their mines to their plants. This same session of the West Virginia Legislature also enacted legislation granting coal pipelines the right of eminent domain.

The petroleum pipelines were constructed under the railroads only after a long period of open warfare and litigation which ultimately resulted in the passage of legislation in most States granting the petroleum pipelines the necessary right of eminent domain to enable them to compete. However, the efforts of the petroleum pipelines to achieve the right of eminent domain in the States were not sufficient to bring into being free competition between the railroads and the petroleum pipelines. In June 1941 it became necessary for the U.S. Congress to enact the Cole bill granting petroleum and petroleum products pipelines the Federal right of eminent domain in instances where the President found that such pipelines were or might be necessary for national defense purposes (act, July 30, 1941, c. 333, 55 Stat. 610, as amended June 30, 1943, c. 180, secs. 1, 2, 57 Stat. 270; June 8, 1945, c. 177, 59 Stat. 233).

The legislative history of the Cole bill reveals that it was prompted primarily by the refusal of the railroads to permit the construction of petroleum pipelines under their tracks even at a time when this country was threatened with a grave national emergency. In a letter dated January 23, 1941, to the chairman of the Interstate and Foreign Commerce Committee, President Franklin D. Roosevelt stated, in part, as follows:

“I have been informed by the Government agencies concerned that the completion of one gasoline pipeline and the commencement of another to the Southeastern States have been delayed by opposition from other carriers in interstate commerce. Although this situation ultimately might correct itself, delay in its solution will retard the completion of essential transportation facilities. IL the matter is not settled before your committee resumes its investigations under House Resolution 290, as extended, I hope that it will be included in your hearings and that a solution thereto will be presented to the Congress.”

Under the terms of the Cole Act, the President authorized the use of Federal eminent domain in the construction of the Plantation pipeline from Baton Rouge, La., to Greensboro, N.C.; the southeastern pipeline from St. Joe, Fla., to Chattanooga, Tenn.; the Portland pipeline from South Portland, Maine, to Montreal, Canada; the Project 5 pipeline from El Dorado, Ark., to Helena, Ark., and one or more pipelines from Port St. Joe and other points on the gulf coast of Florida to the St. Johns River, Fla., as well as a crude oil pipeline from Yazoo, Miss., to Charleston, S.C. (see Historical Note, 15, U.S.C.A., pp. 164, 165). The Cole bill expired by its own terms with the termination of the war emergency on July 25, 1947. No new Federal legislation continuing the granting of eminent domain to petroleum pipelines is required because the railroads now apparently recognize that competition with petroleum pipelines is inevitable and thus voluntarily issue them crossing permits.

Today the passage of S. 3044 is required for substantially the same reasons that prompted the enactment of the Cole bill. The railroads have again put their own private monopolistic interests ahead of the public interest and have openly vowed to misuse their free public land grants to stifle a competing form of transportation. Their opposition to S. 3044 is substantially the same as that which they offered to the Cole bill. However, despite their many dire predictions, the railroads survived competition from the petroleum pipelines made possible by the passage of the Cole bill. It is reasonable to assume that they will also survive competition from coal pipelines constructed pursuant to eminent domain rights granted under S. 3044. In fact, at least one railroad predicts that by the use of special trains operating as units the railroads "should beat coal pipelines in every factor of service and economics" (hearing transcript, p. 233). These and other predicted economies in railroad transportation of coal, which have materialized as a result of the threat of competition from coal pipelines, obviously will never be achieved unless actual competition is made possible by the passage of S. 3044.

The railroads also claim that S. 3044 does not contain adequate safeguards to protect the public interest. It is ironic that this contention should be made by an industry which has traditionally ignored the interests of the public. Of more importance, the contention is wholly frivolous and is obviously advanced solely for the purpose of delay.

For example, the railroads contend that it would be appropriate for the Senate Commerce Committee to consider how the pipeline will undertake the transportation of all coal offered by any coal producers, how will the small coal producers get their coal to the head of the pipelines, how will they get the coal to their customers at the end of the pipeline, and who will be their customers at the end of the pipeline. The answers to these questions will vary, of course, depending upon the location of each particular pipeline project and the needs of the public it will serve. Moreover, there is no need to indulge in dilatory speculations concerning a myriad of possible future coal pipeline locations, operations, and markets because under the provisions of S. 3044 no coal pipeline will be entitled to exercise the right of eminent domain unless and until the Secretary of the Interior has found that its operations are "required by the public convenience and necessity.” As each particular pipeline project is proposed, it will be appropriate for the Secretary of the Interior to then consider questions such as those now raised by the railroads in making his determination of the threshold issue of whether the proposed pipeline is “required by the public convenience and necessity." Such determination can only be made in the light of all of the relevant facts and circumstances existing at the time each particular pipeline project is proposed.

The railroads further complain that S. 3044 does not provide for the comprehensive regulation of the coal industry in the same manner as the Natural Gas Act provides for the regulation of the natural gas industry. This invalid comparison of apples and oranges is patently ridiculous. The provisions of the Interstate Commerce Act governing the regulation of common carrier pipelines are as complete and comprehensive as those of the Natural Gas Act governing the regulation of private carrier natural gas pipelines. The two acts necessarily differ in certain respects because of the basic differences in regulatory problems between common carrier and private carrier pipelines.

For example, the Natural Gas Act does not contain any provisions similar to those set forth in section 1(4) of the Interstate Commerce Act requiring every common carrier subject to part 1 of the act "to provide and furnish transportation upon reasonable request therefor, and to establish reasonable through routes with other such carriers, and just and reasonable rates, fares, charges, and classifications thereto." The omission of such provisions from the Natural Gas Act is understandable since it is designed primarily for the regulation of private carriers which are not obligated to transport any natural gas owned by others. On the other hand, the Natural Gas Act contains provisions relating to the regulation of the rates charged by private carrier pipelines for the sale of their gas for resale. These provisions obviously have no place in the Interstate Commerce Act because common carrier pipelines are primarily engaged in the transportation of commodities owned by others rather than the sale of their own commodities.

Although the Natural Gas Act and the Interstate Commerce Act differ in certain respects, such as those mentioned above, it is interesting to note that the two acts are practically identical with respect to the powers of the Interstate Commerce Commission and the Federal Power Commission over the rates of the pipelines subject to their respective jurisdictions and the mechanics by which the pipelines' rates are established, supervised, and controlled by the two regulatory agencies. Indeed, a reading of the two acts will reveal that the rate provisions of sections 4 and 5 of the Natural Gas Act were copied practically verbatim from the applicable provisions of sections 6 and 16 of part 1 of the Interstate Commerce Act. Thus, it is apparent that the existing provisions of the Interstate Commerce Act contain all of the time-tested safeguards necessary to assure the Congress that coal pipelines will be regulated in a manner consistent with the general public interest and welfare.

I respectfully submit that the facts stated above are vital to proper consideration of the proposed legislation. Therefore, I request that this communication be incorporated in the official record of the committee and included as a part of the printed record of the proceedings. With many thanks for your cooperation, I am, Sincerely yours,

OSCAR L. CHAPMAN, Attorney for Teras Eastern Transmission Corp.

ASSOCIATION OF AMERICAN RAILROADS,

Washington, D.C., June 5, 1962. Hon. WARREN G. MAGNUSON, Chairman, Commerce Committee, U.S. Senate, Washington, D.O.

DEAR MR. CHAIRMAN: It is my understanding that the recent hearings on S. 3044 were recessed subject to call of the chairman and that the record of those hearings is still open.

There has come to my attention a letter addressed to you and dated May 18, 1962, from Mr. Oscar L. Chapman, attorney for Texas Eastern Transmission Corp. That letter was made a part of the record and appears at pages 615 to 625, inclusive, of the transcript. Mr. Chapman is highly critical of the position taken and the presentation made by the railroads on S. 3044.

Mr. Chapman urges that passage of S. 3044 is required “to prevent the perpetuation of the virtual monopoly now enjoyed by the railroads in the long distance inland transportation of coal.” His concept of a railroad monopoly upon the transportation of coal, to say the least, is at variance with the position taken by the coal industry in numerous proceedings before the Interstate Commerce Commission. In various proceedings before that Commission the coal industry has maintained that the railroads' share of the transportation market in coal was constantly diminishing while the tonnage transported by truck and barge was increasing. On one occasion, the coal industry succeeded in persuading a Special Subcommittee on Coal Research of the House Committee on Interior and Insular Affairs that a substantial decline was taking place in the percentage of bituminous coal production shipped by rail and a substantial increase in the percentage shipped by other modes of transportation (H. Rept. 1263, 85th Cong., 1st sess., p. 37).

Mr. Chapman argues that Congress should not permit the railroads to “misuse the many millions of acres of free land grants which they received from the States and the Federal Government” and that the railroads "have openly vowed to misuse their free public land grants to stifle a competing from of transportation.” As you are well aware, Mr. Chairman, only some 7 percent of the railroad mileage in the United States ever received lang-grant aid. Indeed, land-grant railroad mileage in the eastern part of the United States is practically nonexistent. Referring to the particular coal slurry pipeline which Mr. Chapman's company and Consolidation Coal Co. propose to build from West Virginia to the eastern seaboard, I seriously question whether such pipeline would cross a single foot of land-grant railroad right-of-way. The five railroads that appeared before your committee during the hearings on this bill, namely, the Western Maryland, the New York Central, the Pennsylvania, the Chesapeake & Ohio, and the Norfolk & Western, operate a total of 28,612 miles of railroad. I am informed that the only land-grant mileage on these railroads is in the State of Michigan and consists of some 200 miles operated by the New York Central, the Pennsylvania, and the Chesapeake & Ohio.

Moreover, and again, Mr. Chairman, you are fully aware of the fact, Federal railroad land grants were not "free" gifts as implied by Mr. Chapman's statement. On the contrary, obligations to perform free transportation service for the Government, and subsequently service at reduced rates, were imposed upon the few railroads receiving such grants. As you well know, the Congress of the United States repealed these land-grant obligations after having determined that the Federal Government had more than received the full value of land-grant aid.

In referring to the Cole bill, the letter to you implied that such legislation was enacted so as to bring into being free competition between the railroads and the petroleum pipelines. The legislative history of the Cole bill clearly reveals that it was a temporary measure enacted in the interests of national defense during a wartime emergency and for the purpose of meeting, during that emergency, a critical situation anticipated on the eastern seaboard. Indeed, the legislation authorized, if necessary, the construction of pipelines by the Federal Government itself in order to meet that emergency.

At page 4 of the letter to you it is stated the railroads contend "that it would be appropriate for the Senate Commerce Committee to consider how the pipeline will undertake the transportation of all coal offered by any coal producers, how will the small coal producers get their coal to the head of the pipeline, how will they get the coal to their customers at the end of the pipeline, and who will be their customers at the end of the pipeline." The

railroads do so contend that it is appropriate for your committee to concern itself with such questions since we believe that neither your committee nor the Congress has any intention of granting the Federal power of eminent domain to a purely private operation. The letter urges you not to consider such questions since answers to them will vary depending upon the location of each particular coal slurry pipeline project. While these questions are pertinent with respect to any pipeline, they were asked with particular reference to the pipeline proposed from the State of West Virginia to the eastern seaboard and no answers to these questions were forthcoming even with respect to that pipeline.

It is argued that there is no need for you to examine these questions since under the provisions of S. 3044 no coal pipeline could exercise the right of eminent domain until the Secretary of Interior had found that its operations are “required by the public convenience and necessity.” In his testimony before your committee the Chairman of the Interstate Commerce Commission questioned whether, in its interpretation and application, such provision would be given the same construction as is the term "public convenience and necessity” as now used in the Interstate Commerce Act. We shared this doubt and, indeed, there is every reason to believe that such would not be the case. For instance, further on in Mr. Chapman's letter he argues that the Natural Gas Act is "designed primarily for the regulation of private carriers which are not obligated to transport any natural gas owned by others.” However, that same act provides that no natural gas company may construct a pipe line or engage in the transportation of natural gas unless it shall have obtained from the Federal Power Commission a certificate of public convenience and necessity.

The letter further argues that "the provisions of the Interstate Commerce Act governing the regulation of common carrier pipelines are as complete and comprehensive as those of the Natural Gas Act governing the regulation of private carrier natural gas pipelines." This simply is not so. There is no provision in the Interstate Commerce Act requiring a common carrier pipeline to obtain a certificate of public convenience and necessity, while all natural gas pipelines must obtain such certificates. There is no provision in the Interstate Commerce Act authorizing the Interstate Commerce Commission to direct a pipeline to extend or improve its transportation facilities, while any natural gas pipeline may be required to do so. There is no provision in the Interstate Commerce Act requiring a pipeline to obtain authority from the Commission before it can cease operations or abandon any part of its operations, while all natural gas pipelines must obtain such authority from the Federal Power Commission. There is no provision in the Interstate Commerce Act giving that Commission jurisdiction over sales of commodities transported through pipelines subject to its jurisdiction, while the Natural Gas Act vests such authority in the Federal Power Commission.

As I pointed out in my testimony before your committee, the granting of the power of eminent domain to natural gas companies was a part of the broad and comprehensive regulation to which that industry, in all of its aspects, was subjected. It affords no precedent for the granting of such authority to coal slurry pipelines.

I have not attempted to answer certain accusations made by Mr. Chapman such as those that “the railroads have again put their own private monopolistic interests ahead of the public interest” and, in referring to our position on S. 3044, that “it is ironic that this contention should be made by an industry which has traditionally ignored the interests of the public" or further that our "contention is wholly frivolous and is obviously advanced solely for the purpose of delay.” Such intemperate statements should not be dignified by answering.

It is respectfully requested that this letter be included in the official record of the hearings before your committee on S. 3044. Thanking you for such favor, I am Sincerely yours,

DANIEL P. LOOMIS. Senator Scott. Are there any other witnesses ? (No response.)

Senator SCOTT. If not, the committee declares the hearings on this bill are adjourned.

(Whereupon, at 4:05 p.m., the hearings in the above-entitled matter were adjourned.)

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